Abolition of the Reconstruction Excess Profit Recovery System Requires Consent and Safeguards
"Regulations Should Be Selectively Maintained in Necessary Areas"
"Reconstruction Charges Expected to Be Imposed from August"
Park Sang-woo, Minister of Land, Infrastructure and Transport, mentioned the need to abolish the reconstruction excess profit recovery system but stated that a supplementary measure should be prepared to maintain regulations in necessary areas. Reconstruction charges are expected to be imposed as early as August.
Minister of Land, Infrastructure and Transport Park Sang-woo is speaking at the full meeting of the Land, Infrastructure and Transport Committee held at the National Assembly on the 10th. Photo by Hyunmin Kim kimhyun81@
On the 10th, Minister Park said at the National Assembly Land, Infrastructure and Transport Committee plenary session, "I basically agree with the abolition because I think the reconstruction excess profit recovery system is like a garment that no longer fits," adding, "I will strive to prepare supplementary measures to prevent side effects from the abolition."
When Kim Eun-hye, a member of the People Power Party, inquired about the 'plan for supplementary measures,' Minister Park replied, "Among reconstruction complexes, selectively retaining regulations in areas where they are absolutely necessary can serve as a supplementary measure."
When Representative Kim mentioned that there had been no cases of reconstruction charge payments since 2018, Minister Park said, "If reconstruction charges resume, a considerable amount will be imposed."
The reconstruction excess profit recovery system, which recovers up to 50% of the excess amount if the profit per union member exceeds 30 million KRW, was implemented on March 27. The government and ruling party are in favor of abolition, and unions have refused to submit data citing government housing price statistics, causing local governments to be unable to impose charges for over three months.
Minister Park stated, "I expect charges to be imposed from August this year," and revealed that an average of about 100 million KRW per household will be imposed on a total of 68 complexes.
Jeong Jun-ho, a member of the Democratic Party of Korea, said, "Of the 2.5 billion KRW imposed under the reconstruction excess profit recovery law over the past five years, only 1.5 billion KRW has been paid," adding, "The claim that charges reach several hundred million KRW per household is merely a concern from some quarters, and the specific recovery amount and payment scale have not been confirmed," suggesting reconsideration of the abolition.
Regarding the comprehensive real estate tax, Minister Park said, "It was introduced mainly as a punitive tax, so it should be abolished," and added, "It is appropriate to achieve revenue increase or preservation of local finances through normal fiscal methods."
To abolish the reconstruction excess profit recovery system and the comprehensive real estate tax, the law must be amended.
Regarding criticism that the special loan for newborns fuels real estate price increases, Minister Park explained, "Looking at the loan performance, it is not issued enough to significantly affect the housing market," and said, "Since there are conditions such as the requirement to give birth and restrictions on net assets and total housing floor area, I believe the special loan for newborns does not cause house prices to rise."
He added, "The most prioritized issue across all ministries should be overcoming the low birthrate problem."
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